Exploring the Pros and Cons of Different Methods of Payment I Got Bills…I Gotta Pay! Exploring the Pros and Cons of Different Methods of Payment

I Got Bills! Have you ever heard the expression “Nothing in life is free?” Well, except for air, that’s pretty much true. Everything costs money. Housing, food, clothes, furniture, transportation, games, and toys. Then, there are things like insurance, cable and internet, electricity, and water bills. Want to go to the movies or take a vacation? That costs money too!

Earning Money Most people earn money to pay for the things they need and want by working. The money you earn for doing a job is called your income. Sometimes people refer to it as their salary, wages or paycheck. A budget is a plan that lays out income and expenses so. It helps people plan how they will spend their money and avoid overspending.

I Gotta Pay… There are 5 main ways that people pay for things: Cash Check Credit Card Debit Card Electronic Funds Transfer (EFT)

Cash Cash is the oldest and fastest way to pay for things. Cash includes bills and coins. Pros: Avoid overspending Easy to budget Cons: If it is stolen there is no replacement. Limited by how much you have with you Difficult to keep track of how much you spend

Check A check is a small slip of paper issued by a bank. When you pay for something by check, you are basically writing an official note to your bank authorizing them to withdraw an amount of money from your account and give it to the person to whom you gave the check. Pros Convenient Allows you to pay for things even if you don’t have cash with you Cons Can be stolen You must have the money in your account before writing a check Can run out of checks

Credit Card A credit card allows you to buy things and pay for them later. When you use your credit card, the credit card company pays for your purchases. At the end of the month, they send you a statement showing all the charges you made. You are responsible for paying the bill. If you are not able to pay the entire bill by the due date, the credit card company charges you interest for borrowing their money. This means that you pay more than you actually spent. Pros Quick and convenient Rewards like airline miles or cashback Responsible use helps to establish good credit with banks Fraud protection Allows you to buy more than the cash you have Cons Can be stolen Easy to overspend Irresponsible use can lead to great debt

Debit Card A debit card is cross between a check and a credit card. To use it, you must have enough money in your account to cover the item you are purchasing. You also have a personal identification number, or PIN, which is a 4-digit code that you enter when using your debit card. This helps prevent people from stealing money from your account. Pros Quick and convenient PIN guards accounts fraud Avoids overspending Cons Can be lost or stolen Must have funds in the bank to use it Must remember your PIN

Electronic Funds Transfers (ETF) This is the newest way to pay for things. People use their computers to log-in to their online bank account. They enter the company they wish to pay, the amount, and the date. Then, the bank automatically sends the money. Pros Quick and convenient Can be done ahead of time Good way to keep track of spending Reliable Cons Online accounts can be hacked Usually requires a fee

What is the best way to pay? Which method of payment would be best? Paying your electric bill Grocery shopping Buying a smoothie Repaying a friend who loaned you $10 Shopping for clothes Buying airline tickets Paying your rent or mortgage